Napster eyes movie, game downloads

/ Source: Financial Times

Napster, the fast-growing US digital music service, is considering moving into films and video games in an ambitious drive to win new subscribers.

Chris Gorog, Napster chairman and chief executive, said the US-listed group could apply its online music model to films, TV programming and other video content allowing users tosample and access content over the web.

Napster is the latest technology company to threaten traditional film distributors by exploiting high-speed internet and wireless systems.

"We are currently considering moving into video, particularly to tap the younger video-game generation," said Mr Gorog. "I do think that while there are huge players in the delivery of movies like Sky, there could be a role for Napster."

Napster is locked in competition with Apple's iTunes over the preferred consumer model for digital music distribution.

Apple's service, driven by huge demand for its iPod device, is based on 99 cent track downloads, while Napster offers unlimited music plays for a monthly subscription of about $10.

Mr. Gorog, speaking on the fringes of the Midem music industry conference in Cannes, said that high-profile digital brands could establish a foothold in video content distribution.

He added that subscription was a more likely model for Napster in video, rather than pay-per-view programs.

Napster has not set any revenue targets for video, as its plans are only at a preliminary stage.

Mr. Gorog insisted there was still huge untapped potential for Napster through expansion in music distribution.

The company announced at the weekend that it was movinginto mainland Europe for the first time, launching an operation in Germany later this year. It is seeking strategic partners inGermany, based on the modelin Britain, where it promotes its service through links with Dixons, the consumer electronics retailer, cable group NTL and Virgin Radio. The German move is likely to be repeated in France, depending on talks with local music publishing societies that control rights to songs.

The Nasdaq-listed group, which has yet to break even, is expected to deliver full year revenues of $35 million-$40 million in the fiscal year ending March 30 following a rapid increase in subscription numbers to 270,000 last year.

Mr. Gorog said the company was enjoying threefold annual revenue growth, while its quarterly rate of "cash burn" was running at $10 million.

Last year, the company strengthened its balance sheet by selling its Roxio software business for $90 million, and recently completed a $52 million fund-raiser in New York.